TMI Blog2016 (11) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... y to tax the undisclosed income of assessee. - Decided in favour of assessee. - ITA No. 337/Kol /2014 - - - Dated:- 9-9-2016 - Shri Waseem Ahmed, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member By Appellant : Shri S.L.Kochar, Advocate Shri Anil Kochar, Advocate By Respondent : Shri Rajat Kumar Kureel, JCIT-SR-DR ORDER Per Waseem Ahmed, Accountant Member This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals)-Central-II, Kolkata dated 28.01.2014. Assessment was framed by DCIT, Central Circle-XXVII, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 28.08.2013 for assessment year 2011-12. Shri S.L.Kochar and Shri Anil Kochar, Ld. Advocates appeared on behalf of assessee and Shri Rajat Kumar Kureel, Ld. Senior DR, represented on behalf of Revenue. 2. Sole issue raised by assessee in his appeal is that Ld. CIT(A) erred in confirming the action of Assessing Officer by sustaining the addition of ₹ 1,09,50,000/- on account of unexplained cash credit. 3. Facts in brief as have been brought on record, assessee, an individual engaged in the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he has issued cheques to third parties in lieu of cash so cash deposited with his bank account does not belong to him. Therefore no addition can be made. Before Ld. CIT(A) assessee also consented without prejudice to above that entire cash deposit cannot be treated as income of assessee. Before Ld. CIT(A) assessee submitted that AO should have applied the peak credit theory to arrive at the undisclosed income as there were deposit and withdrawals in the bank a/c of assessee. It is well settled that undisclosed income of assessee should be determined on the basis of peak credit method. The assessee, accordingly, offered an amount of ₹ 9.20 lakh being peak credit balance as on 15.03.2011 for taxes. However, ld. CIT(A) disregarded the plea of assessee by observing as under:- 5. I have considered the submission of the appellant and perused the assessment order. I have also gone through the bank statement of the savings bank account no. 00320100008466 with Bank of Baroda, M.G. Road, Kolkata. I have also considered the decisions of the jurisdictional ITAT relied upon by the appellant. On careful consideration of the facts, I am of the opinion that there is no dispute on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of appellant there cannot be presumption that the money withdrawn was available with the appellant for re-deposit and hence in his case peak credit theory is not applicable. In the course of appellate proceedings the appellant has relied on certain decisions of the ITAT, Kolkata wherein peak credit theory was applied and upheld by the Tribunal. However, all these decisions are distinguishable on facts because in those cases there were both cash and cheques deposited and withdrawals. However, in the case of appellant, as mentioned above, there was no cash withdrawal at all from the bank account. There was 100% deposited of cash and 100% withdrawal through cheques of equal amount. Thus, no withdrawn amount was available with the appellant to re-deposit the same in the undisclosed bank account. The ape has also not claimed that he was engaged in the business of providing accommodation entries. It means, he himself had deposited his unaccounted cash in the undisclosed bank account and issue cheques to parties, may be for purchase of iron and steel products in which he deals or to make some other investments. But, the fact remains that neither in the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re issued. Authorities Below has also denied the arguments made by assessee that he was engaged in the business of accommodating entries provided to various parties. Now the question before us arise so as to whether the cash deposit in the bank account of assessee amounts to undisclosed income. In the aforesaid facts and circumstances, we find that various courts have held to apply the peak credit theory and in this regard, we rely in the order of Hon ble Kolkata Tribunal in the case of Binod Kumar Jha Vs. ITO ward 25(2) in ITA 577/kol/2013 date of order 20.11.2015. The relevant extract of the order is reproduced below. 5. We have heard rival submissions and gone through facts and circumstances of the case. We find from the facts of the case that the assessee has deposited cash amounting to ₹ 83,48,16,130/- in six undisclosed bank account maintained with Axis Bank Ltd. The assessee before AO filed working of peak credit in relation to cash deposits made in these six bank accounts and requested the AO to assess the peak credit amounting to ₹ 1,01,40,000/-. The assessee claimed to have computed the peak credit of these six bank accounts taking all the deposits and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies namely, Gokul Distributors, Indigo Commotrade, Jupiter Tradelink, New Era Commotrade, Swift Distributors and Zenith Management and all these private limited companies are having their bank Binod Kumar Jha, AY 2009-10 accounts in the same bank branch. This modus operandi clearly reveals that the assessee is merely an accommodation entry provider and nothing else. 6. In view of the above facts and circumstances, the Ld. Counsel for the assessee relied on the decision of Coordinate bench in the case of ITO vs. Shri Piyush Poddar in ITA No. 1050/Kol/2011 for AY 2006-07 dated 07.09.2015, wherein exactly on similar circumstances, the Tribunal has directed the AO to assess the peak credit and by observing held as under: 10. We have heard the rival submissions and perused the materials available on record. It is seen that the assessee apart from his regular income had a bank account with Central Bank of India which was used by him only for the limited purpose of providing accommodation entries to various parties. Initially the assessee took a stand that he was deriving finance commission @.25% of all the transactions in the accommodation entry business and offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon by the Revenue. 11. On perusal of the bank account with Central Bank of India, we are satisfied that the deposits and withdrawals are closely linked with and related to each other on day-to- day basis. It is also observed that the ld. AO had not brought any material or evidence on record to prove that the withdrawals made by the assessee from the said bank account having utilized for making any other investments outside the books or meant for any other purpose other than for accommodation entry business. It is pertinent to look into the decision rendered by the Kolkata Tribunal in the case of Mahesh Kumar Gupta in IT(SS)A. No.11/Kol/2014 dated 0.2.2005 wherein ITAT observed that the claim of the assessee was that the cheque withdrawals were for giving loan for the short period. Held as follows :- Binod Kumar Jha, AY 2009-10 The AO cannot refuse to grant set off for the withdrawal made by cheque without bringing on record any materials so that the amount withdrawn by cheque cannot have been received back by the assessee and utilized by him in making subsequent deposits by cheque. Taking all this into consideration, we are of the considered opinion that AO should ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added. We find that the assessee has maintained a bank account which is admittedly not disclosed to the revenue and there is no doubt that the deposits in this bank account represents undisclosed income of the assessee to be assessed as undisclosed income but qua only the peak amount. The assessee has filed complete statement of peak deposit and withdrawals which is at ₹ 1,87,247/- and before CIT(A). We are of the view that the CIT(A) has rightly directed the AO to restrict the addition to the extent of peak amount and we confirm the same. This issue of revenue's appeal is dismissed. 13. However, we would like to make it clear that this direction to the ld. AO to assess the peak credit in this case should not be construed as a conclusive proof in the hands of the beneficiary in the said bank account for explaining their amounts. Accordingly, this issue is set aside to the file of the ld. AO to complete the assessment in accordance with the directions mentioned hereinabove. 7. In view of the above facts and circumstances, we direct the AO to assess the peak credit being a sum of ₹ 1,01,40,000/- as computed by assessee on the basis of deposits made in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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